Although six clinical positions, a mix of nurses and technicians, were eliminated, clinical services will not change as a result of the job reductions, the hospital said.
“L+M and other hospitals are contending with massive structural changes that are happening very rapidly,” said L+M President and CEO Bruce D. Cummings. “We are also experiencing unexpected — and previously unbudgeted — cuts in federal (Medicare) and state (Medicaid) funding. The sheer magnitude of the Medicare and Medicaid cuts impel us to look at all of our services and costs, including the largest component of our budget — personnel,”
L+M officials reported favorable conditions at The Westerly Hospital.
From an operating perspective,” said Cummings, “Westerly Hospital is ‘in the black’ for both June and July — the first two months of the acquisition. In addition, our commitments to Westerly were clearly spelled out in the asset purchase agreement. Our team is in place there and while there are things still to be ironed out, our first two months have been incredibly encouraging.”
As part of the court-approved agreement outlining L+M’s purchase of Westerly Hospital, L+M must maintain all clinical services available at the time of closing for at least two years subject to patient safety provisions.
Cummings outlined several challenges he said contributed to L+M’s decision to reduce its workforce:
• The American Tax Payer Relief Act 2012. It will result in a reduction of payments to L+M of $1.3 million per year for five years. [This law, Also known as “the fiscal cliff deal,” was signed by President Obama in January. It contained numerous provisions affecting various medical services, and extended the so-called doctor fix related to Medicare payments; Cummings noted that it extended the Bush-era tax cuts.]
• Sequestration, the automatic across-the-board reduction that took effect April 1, resulted in a $1 million loss for L+M this year and an anticipated $1 million loss next year.
• Connecticut’s 20 percent cut in Medicaid payments to hospitals. The impact to L+M was $1 million per month this July, August and September and another $4.3 to $6 million reduction next year.
L+M is also preparing, Cummings said, for cuts that will come as part of the Affordable Care Act. Hospitals also stand to see Medicare payments shrink as a result of new and more stringent admitting criteria, a phaseout of Disproportionate Share payments (money hospitals received through the federal government to account for the cost of providing care to the uninsured), and pay-for-performance formulas that are reducing Medicare payment rates.
Sustained drops in patient volumes at L+M — both inpatient and outpatient — are also contributing factors, Cummings said.
“This is an unprecedented time,” said Cummings. “For more than 100 years, L+M has worked to improve the health of the region. Our mission is not changing. As we continue to focus on providing the best in patient care, we will redouble our efforts to develop creative, affirmative responses to the new health care environment and to fashion new programmatic initiatives that will assure L+M’s continuation as one of Connecticut’s leading healthcare organizations.”
Included in the cuts is the elimination of L+M’s involvement with Safe Kids New London County which provided community outreach programs, including car seat safety inspections, bicycle safety and children’s nutrition programs in New London and other areas. The hospital is negotiating with Child and Family Agency of Southeastern Connecticut to build up those services in time.
L+M laid off 14 full- and eight part-time workers in November.